Written by William Schomburg and David Milliken
LONDON (Reuters) – Britain’s unemployment rate rose to 5.1 percent in the last three months of 2020, its highest in nearly five years but still lower than it would have been without a massive job support plan due to the coronavirus that appears Finance Minister Rishi Sunak is ready to extend it. next week.
Separate data from the Office for National Statistics showed that the number of employees on corporate payrolls in January rose by 83,000 from December, the second and largest monthly increase since January 2015.
The unemployment rate – the highest since the first three months of 2016 – was in line with the median forecast in a Reuters poll of economists.
Unemployment was suppressed through the government job retention scheme that supports around one in five employees.
The program is Britain’s most expensive economic support measure for coronavirus and will cost an estimated 70 billion pounds ($ 98 billion) by its scheduled expiration date of April 30.
But numbers based on tax data show that the number of employees on the business payroll has still been falling by 726,000 since February 2020 – equivalent to more than 2% of the workforce – with the majority of jobs lost by workers under the age of 25.
The Bank of England said it believes the unemployment rate will jump close to 8% in mid-2021 after the holiday scheme ends.
Senak is expected to announce an extension of his job support, at least to the sectors worst hit by the government shutdown, in the March 3 budget statement.
“In the budget next week, I will define the next phase of our jobs plan, and the support we will provide during the remainder of the epidemic and recovery,” Sunak said after Tuesday’s data.
Prime Minister Boris Johnson announced his plan to ease England’s lockdown on Monday that would keep some businesses closed until the summer but allow for an earlier gradual reopening of others.
“The outlook for the UK economy is clearer, and with continued support from the Treasury, the Bank of England’s outlook for a peak unemployment rate of 7.75% is likely to be very downbeat,” John Hudson (NYSE: NYSE :), fund manager at Premier Miton, said.
Samuel Toombs, of the consulting firm Pantheon Macroeconomics, said he believes the unemployment rate will reach 6% in the summer.
The Office for National Statistics said the number of job vacancies in the three months to January was 26% less than last year, a less steep drop than last summer when job vacancies fell nearly 60%, although the pace of improvement has slowed in the past few months. .
Wage growth was the strongest since 2008. Total salaries including bonuses increased by 4.7% in the October-December period compared to the same three months of 2019.
The rise in wage growth partly reflects how the brunt of job losses has fallen on people working in low-paying jobs in areas like hospitality, and the Office for National Statistics said wage growth is likely to be less than 3% if this effect is removed. Outside.
Britain entered a new lockdown due to the Coronavirus on January 5 due to a rapid death toll that exceeded 120,000, the highest in Europe.
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